Steady results for JB Hi-Fi but ghosts of Clive Anthonys remain

JB Hi-Fi has today released its full year results for the 2011-12 financial year, reporting sales of $3.13 billion, earnings before interest and tax (EBIT) of $161.5 million and net profits after tax (NPAT) of $104.6 million.

Sales for the group were up 5.7 per cent on the previous financial year, with JB Hi-Fi branded store sales in Australia and New Zealand growing by 7 per cent, while like-for-like sales were down 1 per cent. However, sales for Clive Anthonys stores were down 46.9 per cent on the previous year, while like-for-like sales were down 24.6 per cent (3 Clive Anthonys stores were closed during the year).

Issues with a “restructuring” cost for the Clive Anthonys business in 2010-11 also played havoc with JB Hi-Fi’s comparative earnings and profit statements, which were both down year on year.

When factoring in last year’s one-off restructuring cost of $24.7 million for the poorly performing Clive Anthonys business, earnings and profits were down 17.6 per cent and 22.1 per cent respectively. When this write-down is not factored in to in the comparative results, earnings and profits were only down 0.7 per cent and 4.6 per cent respectively.

“JB Hi-Fi branded stores growth of 7 per cent was pleasing considering the challenging trading environment,” said company CEO Terry Smart of the results. “The speed of industry consolidation increased significantly during the year and, while some short term pain was felt within our gross margin as competitors closed stores and cleared inventory, we expect this consolidation to be beneficial in the longer term.”

JB Hi-Fi’s cost of doing business (CODB) in Australia also rose by 55 basis points in FY12, which the company described as “a pleasing result in an environment with negative comparable store sales and increasing wage costs driven by the combined Fair Work award increases over the past three years of over 10 per cent.”

While there was an increase here, the company’s results statement also highlighted its relatively low CODB when compared to other major retailers. JB’s CODB as a percentage of sales was 14.92 per cent in FY2012, compared to 20.40 per cent for US retailer Best Buy, 23.48 per cent for Dick Smith and 32.06 per cent for Myer (taken from Morgan Stanley Research figures for FY2011).

15 new JB Hi-Fi stores were opened during the 2012 financial year, while the company’s Keilor store in Victoria was closed. The company is also set to open 16 new JB-branded stores in the 2013 financial year, with 3 undisclosed “smaller sub-scale JB Hi-Fi stores” set to close.

New stores will open in Coffs Harbour, North Sydney, Tamworth and Broadway (NSW); Fountain Gate and The Glen (VIC); Oxley (QLD); Tuggeranong (ACT) and Darwin (NT). New stores have also already opened their doors in Port Macquarie (NSW) and Bundaberg (QLD), with a further four Australian stores and one New Zealand store yet to be announced.